Smart packaging: How manufacturers can use it to improve efficiency

As a manufacturer, dealing with packaging is an important consideration. It’s not just about using cardboard boxes or plastic containers to protect the goods that you’re manufacturing. Technology can play a key role too.

Using smart packaging – essentially packaging that goes much further than containing and protecting goods – can benefit your business.

In this article, you’ll learn about smart packaging, how the Internet of Things is making an impact and how your firm can benefit financially.

What is smart packaging?

Smart packaging covers a range of different types of packaging technologies that can extend shelf life, trace items, improve safety and product quality, display useful information for retailers, distributors and consumers, and enable shoppers to engage more fully with the brand.

Chief among the different categories of smart packaging are ‘active’ or ‘intelligent’ packaging. These packets, jars and bottles can be used for products ranging from foods to pharmaceuticals and wine to perfume.

If you’re not using this fast evolving technology yet, it’s worth exploring how it can improve your manufacturing, inventory and lifecycle management and product integrity processes. And, although it requires some investment, it can improve your bottom line quickly and significantly.

You can use this new technology to track and trace products in the manufacturing, distribution and storage cycle. Companies who have adopted it are using smart packaging for predictive planning and better just-in-time delivery schedules.

With counterfeiting still an issue, manufacturers can reassure customers that they’re getting the genuine item. You can also use it guard against illegal distribution and tampering.

Growth of the packaging technology

This technologically advanced type of packaging has been growing rapidly over the past few years.

According to research by Deloitte, the multinational professional services network: “Somewhere between US$5tn and US$10tn worth of consumables are sold globally each year and the vast majority of them are packaged in some way, generating a packaging market of US$424bn in 2016.

“Yet packaging remains a secondary consideration for manufacturers, brands, and retailers alike.”

The Deloitte report covers the US but has implications for the UK too.

It continues: “It is often an overlooked and underutilised aspect of product design that packs immense value for all stakeholders.

“Packaging with enhanced functionality, by way of new technologies, new materials, and thoughtful design – smart packaging – has enormous potential not only to create value, but also to disrupt traditional business models.”

The report adds: “Smart packaging is still emerging, but cannot be ignored, as it presents both significant opportunities and a real risk of disruption. It generated revenues of US$23.5bn in 2015, and is expected to grow 11% annually, reaching US$39.7bn by 2020.”

Reducing food waste

Rather than simply protecting the contents of a packet or container from moisture, air or other contaminants, active packaging might, for instance, contain oxygen absorbent material or chemicals and gases that can be emitted to extend the life of fruit, salad and vegetables.

You can use active packaging to reduce food waste – an issue that damages profitability as well as having serious implications for the environment and sustainable business.

According to EU published data, about 88 million tonnes of food is wasted annually in Europe, and about one-third of the food for human consumption is wasted globally.

Modified atmosphere packaging (MAP) and what are known as ‘oxygen scavengers’ can double the effective shelf life of many perishable food products compared with conventional packaging. Chemicals can be released to prevent food such as fish smelling or chopped fruit from becoming over ripe due to the ethylene it releases.

The familiar pad under food to absorb excess moisture can be adapted so that when it comes into contact with that dampness, it emits carbon dioxide. This can extend the life of a piece of cod, for instance, by up to four days.

In other cases, oxygen absorbers can delay the discolouring of ham and other cold meat, so it doesn’t turn the dull grey colour that puts shoppers off.

Some varieties of active packaging can release anti-microbials to kill off harmful bacteria, thereby preserving the life of food by preventing it from going bad.

Other active packaging can warn shoppers by means of a colour change in the label, for instance, when food is no longer fresh or has been stored at the wrong temperature – information that is more accurate and timely than the traditional best before and sell by dates.

As well as active packaging, the ‘smart’ category includes ‘intelligent packaging’. Here, technology is used to bring about many of the benefits of active packaging as well as others that are more sophisticated and technically advanced.

Smart packaging and the Internet of Things

The Internet of Things (IoT), which connects devices such as sensors, mobile phones and wearable devices to each other via the internet, is pushing the boundaries of intelligent packaging.

Radio frequency ID (RFID) are little tags that identify items as they go through the manufacturing process or are dispatched to a warehouse and beyond. Tags today can cost as little as 10p each and the price is falling as production volumes rise and the technology improves. The IoT means they can be used more widely than ever before.

Similarly, near-field communication (NFC), the technology that allows RFID tags to be read, originally operated within a radius of about 5cm, but is now available across distances of up to 10m.

NFC is routinely embedded in mobile phones. As a result, there are now almost two billion consumer-grade devices that can pick up NFC signals, offering opportunities for you to engage your consumers more effectively with your product in a number of ways that weren’t previously possible.

NFC technology in action

In a recent case, Malibu Rum partnered with Tesco stores around Britain in a marketing initiative that saw NFC technology in some 40,000 bottles to connect with the paired mobile phones of consumers.

NFC tags were attached to bottles and rum fans were able to tap their phones against the Malibu logo to enable them to take part in competitions, find their nearest bar serving the drink or listen to music.

Thinfilm, a Norwegian company, provides NFC in packaging and bottles that allows shoppers to tap a product with their mobile phone and get content that is relevant to them. This might be new product news, information about ingredients or something about the story of the brand.

If you’re a food manufacturer, for instance, you could include sensors that will alert consumers when the product’s expiry date is approaching. There’s even discussion about packaging producers and their customers taking this a stage further with an automatic ordering process.

If the milk and cheese in the fridges of your consumers are about to hit their sell by dates, the technology would automatically order more from their online grocery delivery company.

Use of asset trackers

Exporta, a product handling company, provides packaging solutions and transportable pallets for some of the world’s largest blue-chip companies, including GlaxoSmithKline, DHL and Selfridges.

It introduced an assets tracking system for one of its clients, Reach Printing Services Ltd. Reach is the largest third-party contract print provider in the UK, but it had a costly problem before working with Exporta – it was losing its pallets.

To help eliminate this asset loss, Exporta used barcoding labels with integrated RFID, so each pallet can now be tracked and traced at any point in the network.

Exporta updated an old pallet storage system to achieve improved efficiency, compliance and the exact solution Reach needed, all by revolutionising their transportable pallets.

“Since we started this process with Reach, several companies with very similar requirements have enquired looking for more information and it seems like this solution will certainly become more and more common over the next few years, where companies have closed loops and a requirement for heavy-duty reusable and recyclable pallets,” explains Don Marshall, head of ecommerce and fulfilment at Export.

“It’s also extremely beneficial to those companies are losing a tangible percentage of their pallets through regular use when they go missing. The RFID tracking will always highlight where a pallet is, or last was, at any given point in time and this makes inventory management easy and transparent.”

Generally, says Marshall, the RFID tags or labels are more expensive than a normal label, and they do require the right receiving equipment to read the data.

However, with the reduction in losses, the expense is worth it. The equipment also lasts for several years and so, realistically, the initial investment has a very short payback period.

“The biggest hurdle is on the systems side,” Marshall adds. “The tracking and control works most efficiently if it is integrated with the Warehouse Management System (WMS) and/or Transport Management System (TMS).

“In Reach’s case, their in-house IT team were able to work with our RFID team to integrate the systems and make them work together, but the additional cost does need to be taken into account in the first instance.”

Tracking items

Manufacturers can track items throughout the entire production process. They can save time and money by identifying problems on their production lines before these issues become serious.

Without the need for barcodes to be regularly scanned and paper documents to checked, transported and signed, this kind of technologically advanced packaging allows you to track and manage items even when they’re bundled together, transported and reconfigured across the supply chain.

At the end of the supply chain, you can predict the need for new consignments, orders and manufacturing as products are sold. RFID is increasingly used on products in the healthcare and pharmaceutical sectors where manufacturing and distribution errors – and, worse still, counterfeiting – can harm patients and cost lives.

The use of the IoT in inventory and warehouse management could soon see robots retrieving and moving products based on information received from those items’ packaging as well as commands from human beings.

If one of your products is nearer to its use by date than others, for instance, its sensors could inform the robot via the IoT that it needs to be moved nearer to the exit point so it’s part of the next consignment. Point of sale data can be sent directly and instantly from store to robots who can prepare the next delivery.

The IoT can help to protect your products and your consumers. ScanTrust, for instance, uses the IoT and 2D or QR data matrix codes on products to give each one a unique digital identity. Using mobile phones, manufacturers, their distributor and end users can authenticate any product.

A new type of RFID tags that doesn’t need energy to function is currently under development. They might be small but with an estimated 75 billion such tags projected to be in use by 2025, the amount of energy used to power them will be significant.

Currently RFID tags are inert until powered up by a reader. However, it’s possible that soon they will be permanently active. This would allow them to transmit environmental information from inbuilt sensors.

Engineers at the Massachusetts Institute of Technology (MIT) are exploring the possibility of RFIDs that power themselves using ambient light. A thin layer solar cells can be directly connected to an integrated circuit on the tag.

As with traditional RFID systems, each tag responds as a reader sweeps the area. Here, though, instead of employing energy from the reader, the tag draws energy it needs from the solar cell.

Enterprise-grade 5G networks will coming to market over the next few months and years and will have a profound effect on this kind of packaging.

The combination of increased bandwidth and vastly improved resilience means dispersed operations – technology such as RFIDs – will be able to use 5G to move data more efficiently and cheaply.

Financial benefits of using smart packaging

This exciting new packaging technology offers huge financial benefits. Food and other products can last longer. There’s less chance of products being sent to the wrong warehouse or customer. With better control of products the risk of a recall is greatly reduced, as is the accompanying reputational damage.

According to the US Grocery Manufacturers Association (GMA) and the Food Marketing Institute (FMI), the estimated average cost to the company alone for a food recall is $10m.

The technology’s ability to reduce counterfeiting can save your company huge amounts of money that would otherwise be spent attempting to trace fraudulent product through traditional means.

Similarly, the simplest, cheapest examples of active packaging can improve the appearance and taste of food products – leading to more sales.

Meanwhile, RFID and other aspects of intelligent packaging can improve the speed and accuracy of just-in-time inventory and delivery, cutting costs and improving profitability.

Inspections by regulators or clients that can bring operations to a halt can be handled much more easily since you as a manufacturer can offer great transparency on product traceability and whereabouts in the production and distribution process.

NFC and other technology can be used to complement marketing and promotions budgets thanks to the increased engagement that it can offer your customers at point of sale.

These new, hi-tech bottles, packets, trays and jars might be increasingly affordable and widespread but integrating it into the production process still requires expert knowledge.

Finding the right active and intelligent packaging can be daunting as products proliferate and the technology evolves ever more rapidly.

It’s also essential to think about how intelligent packaging will integrate into your existing IT systems to allow for a seamless flow of information across all areas of your company.

Smart packaging is exciting and can offer huge benefits across the board. But it’s essential to get expert advice before investing in any one product to ensure you’re smart about your smart packaging.